Wednesday, February 24, 2010

Fed Chairman Bernanke Should Apologize to Ron Paul

It seems in vogue these days to apologize for wrong doings. I am not really sure why Tiger Woods apologized on worldwide television to golfers, his wife, his mother, to me, to you...to the entire world, for what appears a personal matter, but I tell you who needs to apologize publicly is Federal Reserve Chairman Ben Bernanke. He needs to apologize for his snarky, condescending attitude toward Congressman Ron Paul when Paul ,

1. asked Bernanke about allegations that the Federal Reserve was involved in funneling money to Saddam Hussein, when Hussein was a favorite of the U.S.,

and

2. asked about allegations that the Fed was involved in transferring Watergate money.

Bernanke labeled the allegations "bizarre."

Naturally, mainstream media took up on Bernanke's cue, and are reporting Paul's allegations without the back story. Here is the back story.

Fed chairman Bernanke simply doesn't know Fed history as well as Ron Paul (Or the history conveniently slipped his memory). As far as Watergate, I always thought it was pretty common knowledge that the money ended up in the burglars' hands through some pretty fishy means. Even wikipedia has part of the story:

[Watergate burglar Bernard] Barker had attempted to disguise the origin of the funds by depositing the donors' checks into bank accounts which (though controlled by him), were located in banks outside of the United States. What Barker, Liddy, and Sloan did not know was that the complete record of all such transactions are held, after the funds cleared, for roughly six months. Barker’s use of foreign banks to deposit checks and withdraw the funds via cashier’s checks and money orders in April and May 1972 guaranteed that the banks would keep the entire transaction record at least until October and November 1972.

Wikipedia, also states:

Investigative examination of the bank records of a Miami company run byWatergate burglar Bernard Barker revealed that an account controlled by him personally had deposited, and had transferred to it (through the Federal Reserve Check Clearing System) the funds from these financial instruments.

Clearly, there were some very, very odd transactions that went down which may, or may not, have been abnormally facilitated by the Fed. Was this a normal Fed wire, or something more convoluted? My sense has always been that there was something a bit extraordinary about the way the funds went through the Fed system. It does smell, for sure, and to ask about it is not bizarre. It should be noted that the Fed chairman at the time was Arthur Burns, who would have sold his own children to a white slave ring if Nixon had asked. (In a recent report by Micahel Labeit, here at EconominPolicyJournal.com, Labeit details the speech of former Columbia University PhD student Walter Block, who during the speech reminisced about his years studying at the school ,Block specifically recalled how Arthur Burns in his class, instead of teaching, simply told stories of his dinners with Nixon.) Note, I don't think Nixon, himself, necessarily asked Burns to help in the transfer of the funds, but Burns would very likely have responded positively to a request from a Nixon lieutenant, given his adoration of Nixon.

Here's the late investigative reporter Sherman Skolnick reporting on the documents the Fed blocked Congress from seeing about its possible involvement with money sent to Hussein:

....in October, 1990, at the time of the Persian Gulf conflict, there was an unpublicized case in the Chicago Federal District Court (No. 90 C 6863). The Illinois Bank Commissioner sought an injunction against the Federal Reserve Board to stop them from turning over certain bank records to the House Banking Committee. The records were those of the Chicago branch of Italy's largest [bank], Banca Nazionale del Lavoro, owned in part by the Vatican.

Called BNL, it had records of Iraqi strongman Saddam Hussein and his secret private joint business dealings with his partner, an American. A close crony of the Federal Reserve, Chicago Federal District Judge Brian Barnett Duff, ordered the return of any records from the Banking Committee, then headed by a Democrat,Rep. Henry Gonzalez (D., Texas).

The House Banking Committee was an intervening party-litigant in the controversy. Judge Duff so opposed the House Banking Committee's efforts to get those records, that the Judge would not listen to the Committee's attorney; did not want the attorney in the Judge's courtroom, the Judge calling him an 800 pound gorilla showing no respect for the court.

In May, 1991, right after the War ended in the Persian Gulf, the case ended up in the Federal Appeals Court in Chicago; a court dominated by Judges tied to the major banks and cronies of the Federal Reserve.

From what I understand,the Illinois Bank Commissioner filed against the Fed at the request of the Fed! What were they hiding? Ron Paul's question wasn't bizarre, it was Chairman Bernanke's response that was bizarre, disrespectful and out of order. It's time for an apology by Chairman Bernanke. And let's see those Fed records about Hussein, the Chicago branch of BNL and the Fed!

Bernanke's response of total ignorance reminds me of the time former Assistant Treasury Secretary for Economic Policy, Phil Swagel told me, with a straight face, he didn't know what a gold swap was.

When it serves them, these guys have very forgetful memories. Thank the heavens there are people like Ron Paul around to remind them.

Well, it seems that Paul may have been onto something...or at the very least raised legitimate questions that deserve investigation. A few minutes on google news produced this 1982 story from the Milwaukee Sentinel by Richard Bradee of the paper's Washington Bureau

"Police who searched the room the Watergate burglars used found $4,200 in $100 dollar bills, all numbered in sequence. Proxmire asked the Federal Reserve Board where the money came from. As he explained in a letter to the late Rep. Wright Patman (D-Tex.), chairman of the House Banking Committee: "I got the biggest run-around [from the Federal Reserve] in years. They ducked, misled, lied, and gave me the idiot treatment."

UPDATE 2: More on the Federal Reserve cover-up of Saddam Hussein payoffs, here.

absent referral to the direct source(s) that any properly written wikipedia article must have for any assertion (thereby bypassing wikipedia, except perhaps to say it's where you found your source), "wikipedia" is essentially a fancy way of saying "someone no one's ever heard of", while pretending it bears great weight.

Thanks for your insight re wikipedia versus an original source, however, I think you are missing the subtlety of my point, which is that Bernanke is claiming no knowledge of a Fed-Watergate connection, while it was common enough knowledge that it appeared on Wikipedia.

BTW, I suspected there would be guys like you lurking, which is why in Update 1 and Update 2 I linked to the Milwaukee Sentinel and NYT as sources, within hours of my original post. I trust you are comfortable with the the Milwaukee Sentinel and NYT as sources?

I'm assuming "guys like you" means someone that wants to post wordy comments that don't add to the conversation for what seems to be the purpose of getting people to click on your links.

Since this post wasn't about the reliability of wikipedia as a source and we already know your opinion on quoting anything from wikipedia, I have to ask...

Do agree with Bernake that Paul's questions were "bizarre"? If yes, what do you find "bizarre" about the questions? If you don't find them "bizarre" and think they were legitimate questions, why?

I'm definitely interested in your thoughts on this. If you want reply to different questions (or create a strawman to attack - ya know, like my comment is about wikipedia being a reliable source), I can't stop you but it will help me understand the purpose of your comments.

While I'm posting, I'll add to my above sources, this one from the LA Times in 1992....

skip all your meandering. referring to wikipedia as the post did was false, and everything to me here not addressing that (e.g., "lurking", "links", "wordy") is shallow and obvious evasion.

, I have to ask...

try logic. you don't have to ask. my opinion on what bernanke said is irrelevant here. i commented solely to correct your lame reliance, however supposedly peripheral, on wikipedia. you should not have cited wikipedia as you did. can't accept? try talking about my inability to grow a good mustache. perfect next evasion strategy.

You added that wikipedia is not a reliable source. While that may be a truth, to add something to the conversation, we'd have to assume that the readers of this blog are not aware of that "truth". Whether or not it's relevant depends on if you're aware of this obvious truth. As a reader with a functioning brain, it's no more relevant to me than if you had said "Bernake is not a reliable source" or "Robert Wenzel is not a reliable source".

"referring to wikipedia as the post did was false..."

No, this post definitely linked to wikipedia so that's not false. As to whether or not the wiki content is "false", I don't know. None of it could be, some of it could be or all of it could be. But I already knew that when I posted my first comment (before you posted your first). In fact, I knew that before I came to this blog yesterday and read the post. That's why I say it doesn't add to the conversation.

"Lurking" wasn't me and I think "wordy" is an accurate description of your comment telling us that wikipedia isn't a reliable source. C'mon SP, 5 words. I fail to see what is shallow about my comment and, since I addressed your only point, that wikipedia isn't a reliable source, I'm not sure what I evaded.

"try logic. you don't have to ask."

For me to use logic to deduce your opinion on this, I would have to know you. Are you under some impression that I know who you are or am familiar with your opinions.

"my opinion on what bernanke said is irrelevant here."

I think it's more relevant that the fact that wikipedia isn't a reliable source.

"i commented solely to correct your lame reliance, however supposedly peripheral, on wikipedia. you should not have cited wikipedia as you did."

Now, I'm confused. I have not relied on wikipedia and since that is the accusation you've been throwing at the author of this blog, I'm assuming you think I am the author of this blog. You make a lot of incorrect assumptions. I am responsible for 3 anonymous comments (including this one) but not the post itself. Found it via LRC.